Alpha Corp Appears to Be the Named Payee of a Cheque

question 25

Multiple Choice

Alpha Corp appears to be the named payee of a cheque drawn by Ultimate Inc. Ultimate, however, insists that that piece of paper cannot possibly be treated as a valid cheque under the Bills of Exchange Act. That is TRUE if

• A) Payment is to be made from an overdrawn account.
• B) The instrument had been materially altered after being drafted.
• C) The instrument is drawn on Lester, who is the major shareholder of Ultimate.
• D) The instrument is postdated.
• E) The instrument was certified before being delivered.

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Definitions:

Accrual-Basis Accounting

An accounting method where revenue is recorded when earned and expenses are recorded when incurred, regardless of cash flow.

Unearned Revenue

Income received by a business for goods or services yet to be provided, often recorded as a liability on the balance sheet until the revenue is earned.

Accrued Revenue

Income that a company has earned but has not yet received payment for.

Depreciation

The methodical distribution of a physical asset's cost across its lifespan, mirroring its depreciation over time.